Yes It’s Complicated But You Should Still Do the Math Before Upgrading Your Mobile Phone

April 8th, 2015 David Siegel

Thanks to the all-out competition between rival cell phone companies, the service that most people now receive is faster, cheaper and with better coverage because of the competition. Because of that, there are a plethora of incentives out there for customers to buy into the new services being offered. And when you are ready to upgrade you can always sell the old one for a reasonable price. Furthermore, many of the new ads from the providers promise “no contract” services as an added incentive.

One of the major complaints from many customers is that they have to sign two-year contracts in order to get the low price and service they want for their new phone. So, it’s not surprising that many companies are pushing the “no contract” slogan. However, is “no contract” really all that much different than the standard contracted two-year service?

Comparing Both Plans
When using AT&T as the provider, comparing their traditional two-year contract plan to the no contract one does offer some differences. For example, a contracted data plan that included $40 for each of four lines is more expensive than their no-contract plan which dropped $15 per line and saved roughly $100 per month. However, when upgrading the phone the differences became less pronounced when taking into account all of the fees and services. Yup there other costs you might not be aware of until the bill arrives.

Standard Two-Year Contract: You get a new phone at a discounted price which is around $400 for a new, upgraded phone. Add to that the increase in the per-month line fee which is generally from $15 up to $40 for the two-year period.

Adding all of that into account you will pay roughly $1,000 extra over the entire length of the contract itself. All things considered, this is quite a hefty fee for an upgraded phone. However, there are other options that you might pursue.

AT&T Next Plan: Here, you do not pay down on the phone at the beginning and the line fees stay the same. However, you will have to make a $36 payment per month on top of your standard phone bill.

The result is paying $864 extra over the two year period which saves $136, but that is not really all that impressive. However, it should not be overlooked if that is the best deal that is available. Everything will depend on the particular needs that you have for phone service.

The issue with the Next Plan is that while you are not technically under a contract, you are obligated to pay for the phone itself. If you decide to drop AT&T as a carrier, then you owe the balance on the phone which is in effect like being under a contract. Of course, you are paying roughly $136 less with the Next Plan if you make the installment payments.

Of course, finding the right plan that works for you will start with going over the entire bill for the two-year period to see what option works best. You may find that there are other, better options out there as well, so be sure to take the time and check them out before committing to a single plan.